Anita Acacio- Preventing Foreclosures

The Mercury News

In his State of the Union Address, President Obama laid out a plan to help responsible borrowers and support a housing market recovery.  Details of that plan were released yesterday.  However, funding for the proposed program must be approved by Congress, lowering the possibility that it will be implemented quickly.

Making sense of the story

• Operated by the Federal Housing Administration, the plan would allow underwater homeowners to refinance into cheaper federally insured loans.  Borrowers with good credit who are current on their loan payments are eligible.
• The measure also streamlines the process of refinancing an underwater mortgage, eliminating the need for an appraisal or submitting a new tax return.
• To qualify, borrowers must be current on their mortgage, have a minimum credit score of 580, and must be refinancing a loan on a single-family owner-occupied principal residence.
• Lenders only need to confirm that the borrower is employed.  Loans that are more than 140 percent of the home value probably would not qualify until banks wrote down part of the balance.
• Congress must approve $5 billion to $10 billion in funding, leading housing experts to praise the plan’s objectives with skepticism of it passing this year.

Read the full story
http://www.mercurynews.com/bay-area-news/ci_19872097

The Mercury News

Paying off a mortgage might sound like an ambitious plan, especially for those who have recently refinanced into a 30-year term.  But it’s still smart for homeowners to give some serious thought as to how they’ll pay off their loan; if not in 2012, then sometime.
Read the full story
http://www.mercurynews.com/real-estate/ci_19731356

Mortgage rates are near historical lows, but the rates lenders are quoting aren’t as eye-popping as those seen in the news.

Read the full story
http://bit.ly/tSOoGE

In the first quarter of 2011, 75 percent of homeowners who refinanced their first-lien home mortgage either maintained about the same loan amount or lowered their principal balance by paying-in additional money at the closing table, according to a report by Freddie Mac. In addition, 21 percent of refinancing homeowners reduced their principal balance.

“Cash-out” borrowers, those who increased their loan balance by at least five percent, represented 25 percent of all refinance loans; the average cash-out share over the past 25 years was 62 percent.

The median interest rate reduction for a 30-year fixed-rate mortgage was approximately 1.2 percentage points, or a savings of about 20 percent in interest costs. Over the first year of the refinance loan life, these borrowers will save more than $1,800 in interest payments on a $200,000 loan.

More info